Mar 17, 1992

A NEW DEADLINE FOR URUGUAY ROUND?

NEW YORK, MARCH 13 (CHAKRAVARTHI RAGHAVAN) – The GATT now seems certain to miss one more of its deadlines: the mid-April deadline for concluding the Uruguay Round of Multilateral Trade Negotiations on the basis of the Draft Final Act proposed by the GATT Director-General Arthur Dunkel.

This is the assessment among participants after this week's meeting of the market access negotiating group to make a multilateral assessment of the progress in the bilateral and plurilateral negotiations for exchange of concessions in this area.

There is now some talk in GATT circles that Dunkel will suggest a new target date of mid-June, citing the U.S.-EC bilateral talks over agriculture as a sign of their earnestness to find a compromise over their differences on the agricultural issue.

But few GATT members agree in private that the negotiations can be concluded until after the U.S. Presidential elections in November.

GATT Director-General Arthur Dunkel, in his capacity as Chairman of the official-level meetings of the Trade Negotiations Committee (TNC), had put forward a "global package" of draft agreements covering all the areas of negotiations on the Uruguay Round agenda, as well as for the establishment of a Multilateral Trade Organisation covered by the Punta del Este mandates).

While based largely on texts negotiated by the participants, the Draft Final Act text however, incorporated compromises put forward in many key areas by Dunkel including on the vexed issue of cutting agricultural subsidies - internal, border protection and exports.

Though, stopping short of presenting it as a take-it-or-leave-it text, Dunkel had suggested this was the best possible approximation of a consensus. In mid-January, the TNC agreed to a four-track approach for concluding the Uruguay Round negotiations on the basis of the Dunkel draft text: the first track for completing the negotiations for exchange of market access concessions, the second track for negotiating initial commitments for trade in services, the third track for "cleaning up" the Dunkel text for internal and legal consistency, and a fourth track for making any changes in the text on the basis of a consensus.

In terms of this, the negotiations, largely bilateral and plurilateral but subject to multilateral assessment in the first two tracks were to have been intensified and accelerated, with tentative schedules filed by 1 March, and final schedules filed by 31 March.

The 1 March deadline, extended by a few more days, came and went, with the major trading nations and others failing to file complete schedules - the EC and a few others unable to file schedules in agricultural products and the U.S. and one or two others unable to do so in respect of industrial products.

At the meeting of the market access group on Thursday, several participants noted the lack of any progress.

Many participants privately say that the progress in completing the market access negotiations is now so much behind schedule that the April deadline can no longer be met.

Some of them including members of the Cairns group have said that the chairman of the market access negotiating group must now formally report to the TNC chairman about this lack of progress.

In the area of initial commitments for trade in services, participants had been expected to file their "requests" for derogations in particular sectors and subsectors from the general obligation in the GATS of the application of "most-favoured-nation" principle.

These were to have been multilaterally reviewed by the Group of Negotiations on Services by March 1, but the date has been extended till March 16.

As of this week, not many countries have filed their derogation lists. Of the four major traders, Canada, the U.S. and the EC have not done so while Japan is reported to be in the process of doing this.

Several participants feet that the majors would not put in their derogation lists now, since it might weaken their bargaining position among themselves and with others, if the negotiations cannot be concluded by mid-April and get extended to at least end of the year.

The statement this week of the U.S. Secretary of State James Baker about the U.S. new offer to the EC and the bilateral talks between them raised a flurry of hopes, much more among the public and in trade circles than among the negotiators themselves.

Though the talks are continuing, with the U.S. and EC reportedly set to hold another round of the talks in Washington next week, the gap between the two is still large.

The U.S. offer for putting the armed EC direct payments to farmers as part of its reform of the Common Agricultural Policy into a special "green box" of non-challengeable subsidies is not seen as enough to meet the EC's demands.

It is now seen as more of an exercise in public image building and preparing the ground for blaming the EC for failure, one trade official suggested, while others saw in its the attempt of Bush and his advisors to show some "success" on the economic front.

Parallel to this gesture of compromise, the U.S. is also reported to be trying to speed up the negotiations for the North American Free Trade Agreement (NAFTA) among Canada, Mexico and the U.S. The U.S. Trade Representative has been reported in the U.S. media as having asked the U.S. negotiators to press ahead and remove many of the square brackets in the text under consideration.

However, trade sources in Washington suggest that concluding the NAFTA is as difficult as the Uruguay Round, since any concessions by the administration could be a target of attack in the primaries and the November elections.

There are probably more domestic lobbies ranged against NAFTA than on the Uruguay Round, according to these sources. Some Europeans see the U.S. move, reportedly in a confidential letter from President George Bush to EC Commission President Jacques Delors, as more of an attempt to split the Europeans and particularly the German-French axis.

Putting these subsidies into a social "green box" would benefit the more inefficient high cost German farmers and hit the French.

Apart from its demand for changes to enable such direct support payments to be put into a "green box", the EC also wants changes to enable it to "rebalance" its external tariffs - reducing tariffs on some products and increasing them on some others, but within the overall reduction targets - and for modification of the proposal for both budget and volume restraints and reductions on export subsidies.

The U.S., as well as many of the leading Cairns group members, have been unyielding on this so far.

Many Uruguay Round participants say that they do not see any prospect of the agriculture tangle being resolved without some major concessions and changes on the part of the U.S. - a prospect which is seen as increasingly remote in view of the U.S. election processes now under way and the challenge to Bush from the Republican right.

But it is as difficult if not impossible to reach compromises and conclude the Round by the mid-April deadline as to make a public assessment that the negotiations have not made progress and have to be suspended or called off.

In such a situation, things will have to be allowed to drift, and procedural ways and new semantics found for shelving any serious efforts to conclude the negotiations until at least after the U.S. presidential elections in November, one of the leading participants suggested.

Dunkel will probably hold some informal consultations, and evolve some language to suggest that progress was being made in the U.S.-EC bilateral talks and a new target date be set for mid-June.

Like many of the earlier deadlines - none of them specifically set, but clearly implied, as in Dunkel's description of the mid-April date as the "last window of opportunity" in 1992 for concluding the negotiations - any new deadline or whatever language is used carry less and less credibility.